Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203620
Authors: 
Kalamov, Zarko
Runkel, Marco
Year of Publication: 
2019
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2019: 30 Jahre Mauerfall - Demokratie und Marktwirtschaft - Session: Health Economics II No. D04-V3
Abstract: 
We analyze individuals with heterogeneous time-inconsistent preferences that consume sin goods and make a savings decision. A government may tax the sin good and provide mandatory health insurance. Due to time-inconsistency, the individual sin good and savings choices in ict internalities. Due to the ex-ante moral hazard of health insurance, sin good consumption also causes an externality. If the individuals' utility is such that savings and sin good demand decisions are decou- pled, the government can achieve the first-best outcome using a uniform tax rate and uniform health insurance. Moreover, in the optimum, the tax rate internalizes only the externality and the government provides full insurance. When the savings and sin good consumption choices are interrelated, the government can still achieve the first-best outcome by additionally using Social Security to stipulate minimum savings requirements.
Subjects: 
sin tax
health insurance
moral hazard
hyperbolic discounting
internality
JEL: 
D11
D15
H21
H31
I12
I13
I18
Document Type: 
Conference Paper

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